HMRC Reviews VAT Classification Rules for Electric Double-Cab Pickups

GB News reported that HMRC has begun considering easing strict VAT rules for electric double-cab pickup trucks. Officials are examining the requirements after receiving industry input on battery weight issues that currently prevent qualification as commercial vehicles. Electric double-cab pickups are blocked from commercial status because heavy batteries push them over the weight limit.

Double cab pick-ups must carry a payload of at least one tonne to be classed as a van for VAT purposes. If they fall short of this threshold they are treated as cars and firms cannot reclaim VAT on the purchase. HMRC will look to review the VAT rules following industry pressure.

A spokesman for HMRC stated that the Society of Motor Manufacturers and Traders set out the commercial challenges faced by manufacturers of double cab pick-up vehicles in meeting the current payload tonnage requirement for electric vehicles given the size and weight of batteries.

SMMT has submitted a proposal suggesting a reduced payload threshold for electric DCPUs which would allow them to be treated as commercial vehicles and enable VAT recovery on the purchase price. No final decision has been made yet on the SMMT proposal.

Several models miss the one-tonne payload cut-off including the Maxus eTerron 9 the KGM Musso EV and the upcoming Toyota Hilux EV. The Maxus T90 EV and the Isuzu D-Max EV meet the one-tonne payload requirement and already qualify for VAT recovery. A Musso EV is priced at just under £40,000 after the Government's £5,000 Zero Emission Grant.

Businesses could reclaim nearly £8,000 in VAT on a Musso EV purchase if the rules are relaxed. Since April 2025 most double-cab pick-ups have been treated as cars for Benefit-in-Kind tax purposes. A legal ruling found many pick-ups are equally suited to carrying passengers and goods meaning they should default to being classified as cars.

Electric pick-ups pay 4 per cent company car tax rates despite being classed as cars for BIK. Industry groups warned aligning the VAT rules with the realities of EV design would be essential to support the transition away from diesel. The SMMT regularly engages with HMRC to support a competitive market.

At least 33 per cent of new car sales this year will need to be electric under the Zero Emission Vehicle mandate.